Gold loan vs credit card loan: Which is better for urgent expenses?
You may sometimes find yourself in a situation where your income or savings are not sufficient to cover certain expenses. It could be a medical emergency, a wedding in the family, or for funding your child’s education. In such cases, you may need to consider taking out a loan from a bank or a non-banking finance company (NBFC).
Fortunately, there are several credit options available to meet such expenses, including gold loans and credit card loans. These credit options can help you manage short- and medium-term expenses when you face a shortage of money.
Many leading lenders now offer online application and approval processes that can be completed within minutes. However, it is important to have a clear understanding of both the credit options. Here’s what you should know before you make a decision.
1. Accessibility and immediate funds
When you find yourself in need of immediate funds, gold loans provide a quick and easy solution. Unlike credit cards that often come with a lengthy application process and credit limits, gold loans allow you to leverage the value of your gold assets and access funds seamlessly. By simply pledging your gold, you can obtain the funds you require without the hassle of credit checks or lengthy approval procedures.
2. Lower interest rates and cost-effectiveness
Gold loans have a comparatively lower rate of interest. Credit cards may come with high-interest charges. This makes gold loans a cost-effective borrowing option. By utilising your gold jewellery as collateral, lenders are more willing to offer lower gold loan interest rates, resulting in reduced overall borrowing costs and greater savings in the long run.
3. Higher borrowing limit
Unlike credit cards, which are subject to pre-approved credit limits, gold loans offer greater borrowing potential. The loan amount is determined based on the value of the gold you pledge as collateral. Therefore, the higher the value of your gold assets, the higher the loan amount you can obtain.
You can also use the online Bajaj Finserv Gold Loan Calculator to determine the payable amount for each month. This further simplifies the repayment procedure as you can choose a tenure that better suits your financial needs.
4. Minimal impact on credit score
Credit card usage and repayment behaviour directly impact your credit score. Gold loans, however, have little to no impact on your credit score. By opting for a gold loan, you can access the funds you need without worrying about potential credit score fluctuations. This advantage is particularly beneficial if you are looking to maintain a healthy credit profile or if you have a limited credit history.
When it comes to choosing the right financial option for you, it is important to consider the advantages offered by gold loans compared to credit cards. While credit cards have their merits, you may find that gold loans can be a more favourable choice. With their accessibility, lower interest rates, higher borrowing limits, minimal impact on credit scores, and added security, gold loans provide a reliable and cost-effective solution to meet your financial needs.
Gold loan vs credit card loan in India
When you need quick money, both gold loans and credit card loans can help. However, they work differently and suit different needs. If you are looking for lower interest and convenient repayment, a gold loan from Bajaj Finance may be a better choice.
Here is a simple comparison to help you decide:
- Interest rates: Gold loans usually come with lower interest rates compared to credit card loans. Bajaj Finserv Gold Loan offers competitive gold loan interest rates, making it cost-effective.
- Loan amount: With a gold loan, the amount depends on your gold’s value. In a credit card loan, it depends on your credit limit.
- Approval and process: Bajaj Finance offers quick processing for gold loans. There is no long paperwork or credit check needed, unlike credit card loans.
- Repayment options: Bajaj Finserv Gold Loan gives you more choices, like paying interest monthly or paying everything at the end.
- Eligibility: Gold loan eligibility is easy. You only need to pledge your gold. Credit card loans may need a good credit score.
If you have gold jewellery and need funds quickly, a gold loan is often simpler and more affordable than a credit card loan.
